Too late now to return the cheque, it will be canceled but the claim will still stay on your record, in general for five years. It happened to me in my pre-MMM days when I had full coverage for my clown car, and I made the mistake of making a claim for an at-fault fender bender. Even though I decided not to pursue the claim, it still appeared on my claims record for five years. Your insurer might have different rules, maybe ask the question. If canceling the claim will still show en entry on your claims record, I'd take the $500, invest it or pay debt, and cancel your collision/comprehensive coverage to only keep the minimum protection required by law, and the maximum deductible.